NetEase Kaola facilitates sales of made in Japan products in China

HANGZHOU, China, May 16, 2018

NetEase Kaola, Chinas’ leading cross-border e-commerce operator, recently inked strategic cooperation agreements with a number of Japan-based high-end brands, including Tenga, Sastty, Shinyakoso, Spa Treatment, belulu, Purevivi, LuLuLun and Dokkan Abura Das. The agreements are part of the e-commerce firm’s “made in Japan” strategy released last year whereby the firm plans to spend 500 billion yen (approx. USD 4.5 billion) to roll out more Japanese products in China’s domestic market.

NetEase Kaola has outrivaled Alibaba Group Holding’s Tmall Global or JD.com’s JD Worldwide in terms of market share for two years running, making the operator the largest of its kind in China.

Shortly before last year’s Singles Day on November 11, China’s annual one-day shopping event that is akin to a combination of Black Friday and Cyber Monday, NetEase Kaola CEO Zhang Lei disclosed the “made in Japan” strategy during her business visit to Japan, while inking agreements with six leading Japanese brands, in a move to further diversify NetEase Kaola’s product mix and cater to the increasing demand for higher quality products among Chinese shoppers.

The six leading Japanese brands were Kobayashi Pharmaceutical, a brand that had already garnered a following among Chinese consumers, Earth, a professional beauty brand, Kirindo, an established cosmeceuticals chain store, Naris, a skin care brand, and Spa Treatment, a professional beauty and skin care brand. On the back of significant sales results on NetEase Kaola, Spa Treatment decided to expand its strategic partnership with the Chinese e-commerce operator and renewed the contract.

NetEase Kaola becomes Rakuten’s largest sales channel in China. Japan has been NetEase Kaola’s largest import market, as made in Japan cosmeceuticals as well as personal care, maternal, child care and household products are sought after in China. Between 2015 and 2017, Japanese products became the largest contributor to NetEase Kaola. With Chinese shoppers becoming considerably more discerning in their tastes and in what they expect from the goods they purchase, shoppers increasingly value quality over price. The value that Japanese culture places on craftsmanship is in line with NetEase Kaola’s commitment of providing consumers with high quality products.

The fast growth of cross-border e-commerce helps overseas brands recognize the huge potential of the Chinese market and leads to partnerships with Chinese cross-border e-commerce operators. Yet results of such partnerships are varied. NetEase Kaola’s direct sourcing combined with vendor assistance services that are 100% handled in-house assures peace of mind and maximized benefits for the firm’s overseas vendors.

Rakuten, one of the largest e-commerce platforms in Japan, reached an agreement with NetEase Kaola in June 2016, in a move to allow Chinese consumers to conveniently buy a variety of made in Japan products at relatively low prices. Rakuten sells more than 400 popular Japanese brands on NetEase Kaola including apparel, maternal and child care products, affordable luxury items as well as sports and outdoor recreational equipment and accessories, with monthly gross merchandise volume growing (GMV) by 31.6%. The Chinese platform has become Rakuten’s largest sales channel in China.

Michio Takahashi, senior manager of cross border trading business at Rakuten, said that although many made in Japan products are immensely popular in their home market, they are still quite unknown in China. Rakuten wants to give Chinese shoppers access to the products at affordable prices and this is the core motive for the cooperation with NetEase Kaola.

Rakuten is especially popular among female shoppers with the consumer group being the Japanese platform’s key target audience. Mr. Takahashi noted that the similarity between the two platforms’ key audiences is one of main reasons behind the success of the partnership. Thanks to the collaboration, sales at Rakuten’s flagship store in China quadrupled year on year for 2017.

Mr. Takahashi added: “Prospects for the China-Japan cross-border e-commerce market remain promising. The number of affluent consumers is on the rise. We expect strong market demand to lead to expanded cooperation in the future and NetEase Kaola is a strong strategic partner.”

Sales of Japanese face mask leader LuLuLun surged 300 percent after being part of a promotion on the NetEase Kaola platform for just two days

During the recent Japanese cherry blossom season, a promotion launched by several Japanese brands witnessed a more than 40 percent surge in sales across the board. Among the participating brands, Japanese popular face mask producer LuLuLun, which had signed a deal with NetEase Kaola, saw its sales grow more than 300 percent in two days, signaling the first milestone as a result of the cooperation with NetEase Kaola.

Japanese high-end skin care brand THREE, which had started its collaboration with NetEase Kaola prior to last year’s Singles Day on November 11, recently showcased its new spring collections in the NetEase Building, the headquarters of NetEase Kaola in Hangzhou, including a new series of energizing skin care products, new makeup products for spring/summer 2018, and limited-edition 3.3 spring peach blossom makeup products exclusively for the Chinese market.

THREE, Japan-based Acro’s cosmetics and skin care brand, was created by Acro founder Yasushi Ishibashi in 2009. Having set off a makeup craze in Taiwan, Hong Kong and Thailand, THREE has been on the must-buy lists of online shopping agents in Japan and is strongly recommended by Japan’s Cosme Grand Prize every year. Mr. Ishibashi showcased each new product to Chinese consumers at the launch event. He said that THREE chose to enter the Chinese market through NetEase Kaola due to its trust in the e-commerce site.

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